Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method. Preparation of a schedule translating the trial balance from N kroner to dollar assuming the krone is the functional currency.

Question

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 12.17P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule translating the trial balance from N kroner to dollar assuming the krone is the functional currency.

a

Expert Solution

Answer to Problem 12.17P

The trial balance total after transaction adjustment December 31 20X4 $267,420.

Explanation of Solution

V Inc.

Trial balance translation

For the year ended December 31, 20X5

Particulars	Kroner	Exchange rate	U.S. Dollars
Cash	150,000	.21	31,500
Accounts receivable	200,000	.21	42,000
Inventory	270,000	.21	56,700
Property, Plant and equipment	600,000	.21	126,000
Cost of goods sold	410,000	.20	82,000
Operating expenses	100,000	.20	20,000
Depreciation expenses	50,000	.20	10,000
Dividends paid	40,000	.19	7,600
Total debit	1,820,000		375,800

Accumulated depreciation	150,000	.21	31,500
Accounts payable	90,000	.21	18,900
Notes payable	190,000	.21	39,900
Common stock	450,000	.18	81,000
Retained earnings	250,000	.18	45,000
Sales	690,000	.20	138,000
Total	1,820,000		354,300
Accumulated other comprehensive income –translation adjustment credit	24,000	.20	4,800 21,500
Total credit			375,800

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The journal entries that relate to its investment in N subsidiary during 20X5 assuming T uses fully adjusted equity method.

b

Expert Solution

Explanation of Solution

Date	Particulars	Amount $	Amount $
Jan 1	Investment in V company Stock	151,200
	Cash		151,200
	(cash paid for purchase of investment from V)

July 1	Cash	7,600
	Investment in V company		7,600
	(Cash received on account of dividends)

Dec 31	Investment in V’s common stock	26,000
	Income from subsidiary		26,000
	(recognition of equity in net income from subsidiary

	Investment in V common stock other income	21,500
	Translation adjustment		21,500
	(Translation adjustment is recognized)

	Income from subsidiary	3,600
	Investment in V company		3,600
	(amortization of differential)

	Investment in V Company common stock other comprehensive income	4,020
	Translation adjustment		4,020

Working Notes:

Purchase of investment from V Inc. recorded.
Cash received on account of dividends from V $7,600 = NKr40,000 × $.19
Equity in net income from subsidiary recognized $26,000 = NKr130,000 × $.20
Parents share of translation adjustment recorded.
Amortization of differential recognized.

Determination of differential in amortization Schedule 1

Particulars	Kroner	Exchange rate	U.S. Dollars
Property, plant, and equipment:
Income statement:
Difference at beginning of the year	100,000	.18	18,000
Amortization 20X5 NKr100,000 ÷ 10 years	(10,000)	.20	(2,000)
Balance	90,000		16,000

Balance sheet:
Remaining balance on December 31, 20X5	90,000	.21	18,900
Difference to other comprehensive income – translation adjustment			2,900


Patients:
Income statement:
Difference at the beginning of year	40,000	.18	7,200
Amortization 20X5 NKr40,000 ÷ 5 years	(8,000)	.20	(1,600)
Remaining balance	32,000		5,600

Balance sheet:
Balance on December 31,20X5	32,000	.21	6,720
Differential other comprehensive income – translation adjustment			1,120

Amortization of differential

Property plant and equipment $2,900

Patient $1,120

Total $4,020

c

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule for T’s consolidated comprehensive income for 20X5.

c

Expert Solution

Answer to Problem 12.17P

T’s consolidated comprehensive income $322,920.

Explanation of Solution

Computation of T’s comprehensive income

Particulars	U.S. Dollars
Income from T’s operations for 20X5	275,000
Add: Income from the N subsidiary	26,000
Less: Amortization of differential	(3,600)
T’s net income	297,400
Add: translation adjustment $21,500 + 4,020	25,520
Total consolidated comprehensive income	322,920

d

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

T’s total consolidated stockholders equity at December 31, 20X5.

d

Expert Solution

Answer to Problem 12.17P

T’s total consolidated stockholders equity at December 31, 20X5 $3,722,920.

Explanation of Solution

Computation of T’s stockholders’ equity for December 31, 20X5.

Particulars	U.S. Dollars
T’s stockholders’ equity at January 1, 20X5	3,500,000
Add: Net income for 20X5	297,400
Less: Dividends declared by T during 20X5	(100,000)
Add: Accumulated other comprehensive income – translation adjustment	25,520
Consolidated stockholders’ equity at December 31, 20X5	3,722,920

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Students have asked these similar questions

On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Incorporated, a Norwegian company, at a cost of $151,200. Ship's net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiary's identifiable assets and liabilities approximated their fair values except for property, plant, and equipment and patents acquired. The fair value of Ship's property, plant, and equipment exceeded its book value by $18,000. The remaining useful life of Ship's equipment at January 1, 20X5, was 10 years. The remainder of the differential was attributable to a patent having an estimated useful life of 5 years. Ship's trial balance on December 31, 20X5, in kroner, follows: Cash Accounts Receivable (net) Inventory Property, Plant and Equipment Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid…

On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Incorporated, a Norwegian company, at a cost of $153,000. Ship’s net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiary’s identifiable assets and liabilities approximated their fair values except for property, plant, and equipment and patents acquired. The fair value of Ship’s property, plant, and equipment exceeded its book value by $18,000. The remaining useful life of Ship’s equipment at January 1, 20X5, was 10 years. The remainder of the differential was attributable to a patent having an estimated useful life of 5 years. Ship’s trial balance on December 31, 20X5, in kroner, follows: Debits Credits Cash NKr 153,000 Accounts Receivable (net) 229,000 Inventory 278,000 Property, Plant and Equipment 614,000 Accumulated Depreciation NKr 163,000 Accounts Payable 106,000 Notes Payable 207,000…

1. Matray acquired 16,000 ordinary shares of Petros on 1 April 20X9. On 31 December 20X8Petros’s accounts showed a share premium of $4,000 and retained earnings of $15,000. The fairmarket value of non-controlling interest at acquisition was $7,000.Below are the statements of financial position for the two companies as at 31 December 20X9:Matray PetrosNon-current assets:Property, plant and equipment 39,000 33,000Investment in Petros 50,000Current assets 78,000 40,000Total assets 167,000 73,000Equity and liabilitiesEquityOrdinary shares of: $1 each 100,000: 50c each 10,000Share premium 7,000 4,000Retained earnings 40,000 39,000Current liabilities 20,000 20,000Total equity and liabilities 167,000 73,000Required:Prepare the consolidated statement of financial position of Matray as at 31 December 20X9. Assumeprofits have accrued evenly throughout the year

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 12.17P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule translating the trial balance from N kroner to dollar assuming the krone is the functional currency.

a

Expert Solution

Answer to Problem 12.17P

The trial balance total after transaction adjustment December 31 20X4 $267,420.

Explanation of Solution

V Inc.

Trial balance translation

For the year ended December 31, 20X5

Particulars	Kroner	Exchange rate	U.S. Dollars
Cash	150,000	.21	31,500
Accounts receivable	200,000	.21	42,000
Inventory	270,000	.21	56,700
Property, Plant and equipment	600,000	.21	126,000
Cost of goods sold	410,000	.20	82,000
Operating expenses	100,000	.20	20,000
Depreciation expenses	50,000	.20	10,000
Dividends paid	40,000	.19	7,600
Total debit	1,820,000		375,800

Accumulated depreciation	150,000	.21	31,500
Accounts payable	90,000	.21	18,900
Notes payable	190,000	.21	39,900
Common stock	450,000	.18	81,000
Retained earnings	250,000	.18	45,000
Sales	690,000	.20	138,000
Total	1,820,000		354,300
Accumulated other comprehensive income –translation adjustment credit	24,000	.20	4,800 21,500
Total credit			375,800

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The journal entries that relate to its investment in N subsidiary during 20X5 assuming T uses fully adjusted equity method.

b

Expert Solution

Explanation of Solution

Date	Particulars	Amount $	Amount $
Jan 1	Investment in V company Stock	151,200
	Cash		151,200
	(cash paid for purchase of investment from V)

July 1	Cash	7,600
	Investment in V company		7,600
	(Cash received on account of dividends)

Dec 31	Investment in V’s common stock	26,000
	Income from subsidiary		26,000
	(recognition of equity in net income from subsidiary

	Investment in V common stock other income	21,500
	Translation adjustment		21,500
	(Translation adjustment is recognized)

	Income from subsidiary	3,600
	Investment in V company		3,600
	(amortization of differential)

	Investment in V Company common stock other comprehensive income	4,020
	Translation adjustment		4,020

Working Notes:

Purchase of investment from V Inc. recorded.
Cash received on account of dividends from V $7,600 = NKr40,000 × $.19
Equity in net income from subsidiary recognized $26,000 = NKr130,000 × $.20
Parents share of translation adjustment recorded.
Amortization of differential recognized.

Determination of differential in amortization Schedule 1

Particulars	Kroner	Exchange rate	U.S. Dollars
Property, plant, and equipment:
Income statement:
Difference at beginning of the year	100,000	.18	18,000
Amortization 20X5 NKr100,000 ÷ 10 years	(10,000)	.20	(2,000)
Balance	90,000		16,000

Balance sheet:
Remaining balance on December 31, 20X5	90,000	.21	18,900
Difference to other comprehensive income – translation adjustment			2,900


Patients:
Income statement:
Difference at the beginning of year	40,000	.18	7,200
Amortization 20X5 NKr40,000 ÷ 5 years	(8,000)	.20	(1,600)
Remaining balance	32,000		5,600

Balance sheet:
Balance on December 31,20X5	32,000	.21	6,720
Differential other comprehensive income – translation adjustment			1,120

Amortization of differential

Property plant and equipment $2,900

Patient $1,120

Total $4,020

c

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule for T’s consolidated comprehensive income for 20X5.

c

Expert Solution

Answer to Problem 12.17P

T’s consolidated comprehensive income $322,920.

Explanation of Solution

Computation of T’s comprehensive income

Particulars	U.S. Dollars
Income from T’s operations for 20X5	275,000
Add: Income from the N subsidiary	26,000
Less: Amortization of differential	(3,600)
T’s net income	297,400
Add: translation adjustment $21,500 + 4,020	25,520
Total consolidated comprehensive income	322,920

d

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

T’s total consolidated stockholders equity at December 31, 20X5.

d

Expert Solution

Answer to Problem 12.17P

T’s total consolidated stockholders equity at December 31, 20X5 $3,722,920.

Explanation of Solution

Computation of T’s stockholders’ equity for December 31, 20X5.

Particulars	U.S. Dollars
T’s stockholders’ equity at January 1, 20X5	3,500,000
Add: Net income for 20X5	297,400
Less: Dividends declared by T during 20X5	(100,000)
Add: Accumulated other comprehensive income – translation adjustment	25,520
Consolidated stockholders’ equity at December 31, 20X5	3,722,920

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 12.17P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule translating the trial balance from N kroner to dollar assuming the krone is the functional currency.

a

Expert Solution

Answer to Problem 12.17P

The trial balance total after transaction adjustment December 31 20X4 $267,420.

Explanation of Solution

V Inc.

Trial balance translation

For the year ended December 31, 20X5

Particulars	Kroner	Exchange rate	U.S. Dollars
Cash	150,000	.21	31,500
Accounts receivable	200,000	.21	42,000
Inventory	270,000	.21	56,700
Property, Plant and equipment	600,000	.21	126,000
Cost of goods sold	410,000	.20	82,000
Operating expenses	100,000	.20	20,000
Depreciation expenses	50,000	.20	10,000
Dividends paid	40,000	.19	7,600
Total debit	1,820,000		375,800

Accumulated depreciation	150,000	.21	31,500
Accounts payable	90,000	.21	18,900
Notes payable	190,000	.21	39,900
Common stock	450,000	.18	81,000
Retained earnings	250,000	.18	45,000
Sales	690,000	.20	138,000
Total	1,820,000		354,300
Accumulated other comprehensive income –translation adjustment credit	24,000	.20	4,800 21,500
Total credit			375,800

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The journal entries that relate to its investment in N subsidiary during 20X5 assuming T uses fully adjusted equity method.

b

Expert Solution

Explanation of Solution

Date	Particulars	Amount $	Amount $
Jan 1	Investment in V company Stock	151,200
	Cash		151,200
	(cash paid for purchase of investment from V)

July 1	Cash	7,600
	Investment in V company		7,600
	(Cash received on account of dividends)

Dec 31	Investment in V’s common stock	26,000
	Income from subsidiary		26,000
	(recognition of equity in net income from subsidiary

	Investment in V common stock other income	21,500
	Translation adjustment		21,500
	(Translation adjustment is recognized)

	Income from subsidiary	3,600
	Investment in V company		3,600
	(amortization of differential)

	Investment in V Company common stock other comprehensive income	4,020
	Translation adjustment		4,020

Working Notes:

Purchase of investment from V Inc. recorded.
Cash received on account of dividends from V $7,600 = NKr40,000 × $.19
Equity in net income from subsidiary recognized $26,000 = NKr130,000 × $.20
Parents share of translation adjustment recorded.
Amortization of differential recognized.

Determination of differential in amortization Schedule 1

Particulars	Kroner	Exchange rate	U.S. Dollars
Property, plant, and equipment:
Income statement:
Difference at beginning of the year	100,000	.18	18,000
Amortization 20X5 NKr100,000 ÷ 10 years	(10,000)	.20	(2,000)
Balance	90,000		16,000

Balance sheet:
Remaining balance on December 31, 20X5	90,000	.21	18,900
Difference to other comprehensive income – translation adjustment			2,900


Patients:
Income statement:
Difference at the beginning of year	40,000	.18	7,200
Amortization 20X5 NKr40,000 ÷ 5 years	(8,000)	.20	(1,600)
Remaining balance	32,000		5,600

Balance sheet:
Balance on December 31,20X5	32,000	.21	6,720
Differential other comprehensive income – translation adjustment			1,120

Amortization of differential

Property plant and equipment $2,900

Patient $1,120

Total $4,020

c

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule for T’s consolidated comprehensive income for 20X5.

c

Expert Solution

Answer to Problem 12.17P

T’s consolidated comprehensive income $322,920.

Explanation of Solution

Computation of T’s comprehensive income

Particulars	U.S. Dollars
Income from T’s operations for 20X5	275,000
Add: Income from the N subsidiary	26,000
Less: Amortization of differential	(3,600)
T’s net income	297,400
Add: translation adjustment $21,500 + 4,020	25,520
Total consolidated comprehensive income	322,920

d

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

T’s total consolidated stockholders equity at December 31, 20X5.

d

Expert Solution

Answer to Problem 12.17P

T’s total consolidated stockholders equity at December 31, 20X5 $3,722,920.

Explanation of Solution

Computation of T’s stockholders’ equity for December 31, 20X5.

Particulars	U.S. Dollars
T’s stockholders’ equity at January 1, 20X5	3,500,000
Add: Net income for 20X5	297,400
Less: Dividends declared by T during 20X5	(100,000)
Add: Accumulated other comprehensive income – translation adjustment	25,520
Consolidated stockholders’ equity at December 31, 20X5	3,722,920

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 12.17P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule translating the trial balance from N kroner to dollar assuming the krone is the functional currency.

a

Expert Solution

Answer to Problem 12.17P

The trial balance total after transaction adjustment December 31 20X4 $267,420.

Explanation of Solution

V Inc.

Trial balance translation

For the year ended December 31, 20X5

Particulars	Kroner	Exchange rate	U.S. Dollars
Cash	150,000	.21	31,500
Accounts receivable	200,000	.21	42,000
Inventory	270,000	.21	56,700
Property, Plant and equipment	600,000	.21	126,000
Cost of goods sold	410,000	.20	82,000
Operating expenses	100,000	.20	20,000
Depreciation expenses	50,000	.20	10,000
Dividends paid	40,000	.19	7,600
Total debit	1,820,000		375,800

Accumulated depreciation	150,000	.21	31,500
Accounts payable	90,000	.21	18,900
Notes payable	190,000	.21	39,900
Common stock	450,000	.18	81,000
Retained earnings	250,000	.18	45,000
Sales	690,000	.20	138,000
Total	1,820,000		354,300
Accumulated other comprehensive income –translation adjustment credit	24,000	.20	4,800 21,500
Total credit			375,800

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The journal entries that relate to its investment in N subsidiary during 20X5 assuming T uses fully adjusted equity method.

b

Expert Solution

Explanation of Solution

Date	Particulars	Amount $	Amount $
Jan 1	Investment in V company Stock	151,200
	Cash		151,200
	(cash paid for purchase of investment from V)

July 1	Cash	7,600
	Investment in V company		7,600
	(Cash received on account of dividends)

Dec 31	Investment in V’s common stock	26,000
	Income from subsidiary		26,000
	(recognition of equity in net income from subsidiary

	Investment in V common stock other income	21,500
	Translation adjustment		21,500
	(Translation adjustment is recognized)

	Income from subsidiary	3,600
	Investment in V company		3,600
	(amortization of differential)

	Investment in V Company common stock other comprehensive income	4,020
	Translation adjustment		4,020

Working Notes:

Purchase of investment from V Inc. recorded.
Cash received on account of dividends from V $7,600 = NKr40,000 × $.19
Equity in net income from subsidiary recognized $26,000 = NKr130,000 × $.20
Parents share of translation adjustment recorded.
Amortization of differential recognized.

Determination of differential in amortization Schedule 1

Particulars	Kroner	Exchange rate	U.S. Dollars
Property, plant, and equipment:
Income statement:
Difference at beginning of the year	100,000	.18	18,000
Amortization 20X5 NKr100,000 ÷ 10 years	(10,000)	.20	(2,000)
Balance	90,000		16,000

Balance sheet:
Remaining balance on December 31, 20X5	90,000	.21	18,900
Difference to other comprehensive income – translation adjustment			2,900


Patients:
Income statement:
Difference at the beginning of year	40,000	.18	7,200
Amortization 20X5 NKr40,000 ÷ 5 years	(8,000)	.20	(1,600)
Remaining balance	32,000		5,600

Balance sheet:
Balance on December 31,20X5	32,000	.21	6,720
Differential other comprehensive income – translation adjustment			1,120

Amortization of differential

Property plant and equipment $2,900

Patient $1,120

Total $4,020

c

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule for T’s consolidated comprehensive income for 20X5.

c

Expert Solution

Answer to Problem 12.17P

T’s consolidated comprehensive income $322,920.

Explanation of Solution

Computation of T’s comprehensive income

Particulars	U.S. Dollars
Income from T’s operations for 20X5	275,000
Add: Income from the N subsidiary	26,000
Less: Amortization of differential	(3,600)
T’s net income	297,400
Add: translation adjustment $21,500 + 4,020	25,520
Total consolidated comprehensive income	322,920

d

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

T’s total consolidated stockholders equity at December 31, 20X5.

d

Expert Solution

Answer to Problem 12.17P

T’s total consolidated stockholders equity at December 31, 20X5 $3,722,920.

Explanation of Solution

Computation of T’s stockholders’ equity for December 31, 20X5.

Particulars	U.S. Dollars
T’s stockholders’ equity at January 1, 20X5	3,500,000
Add: Net income for 20X5	297,400
Less: Dividends declared by T during 20X5	(100,000)
Add: Accumulated other comprehensive income – translation adjustment	25,520
Consolidated stockholders’ equity at December 31, 20X5	3,722,920

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Answer 5

Chapter 12, Problem 12.17P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule translating the trial balance from N kroner to dollar assuming the krone is the functional currency.

a

Expert Solution

Answer to Problem 12.17P

The trial balance total after transaction adjustment December 31 20X4 $267,420.

Explanation of Solution

V Inc.

Trial balance translation

For the year ended December 31, 20X5

Particulars	Kroner	Exchange rate	U.S. Dollars
Cash	150,000	.21	31,500
Accounts receivable	200,000	.21	42,000
Inventory	270,000	.21	56,700
Property, Plant and equipment	600,000	.21	126,000
Cost of goods sold	410,000	.20	82,000
Operating expenses	100,000	.20	20,000
Depreciation expenses	50,000	.20	10,000
Dividends paid	40,000	.19	7,600
Total debit	1,820,000		375,800

Accumulated depreciation	150,000	.21	31,500
Accounts payable	90,000	.21	18,900
Notes payable	190,000	.21	39,900
Common stock	450,000	.18	81,000
Retained earnings	250,000	.18	45,000
Sales	690,000	.20	138,000
Total	1,820,000		354,300
Accumulated other comprehensive income –translation adjustment credit	24,000	.20	4,800 21,500
Total credit			375,800

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The journal entries that relate to its investment in N subsidiary during 20X5 assuming T uses fully adjusted equity method.

b

Expert Solution

Explanation of Solution

Date	Particulars	Amount $	Amount $
Jan 1	Investment in V company Stock	151,200
	Cash		151,200
	(cash paid for purchase of investment from V)

July 1	Cash	7,600
	Investment in V company		7,600
	(Cash received on account of dividends)

Dec 31	Investment in V’s common stock	26,000
	Income from subsidiary		26,000
	(recognition of equity in net income from subsidiary

	Investment in V common stock other income	21,500
	Translation adjustment		21,500
	(Translation adjustment is recognized)

	Income from subsidiary	3,600
	Investment in V company		3,600
	(amortization of differential)

	Investment in V Company common stock other comprehensive income	4,020
	Translation adjustment		4,020

Working Notes:

Purchase of investment from V Inc. recorded.
Cash received on account of dividends from V $7,600 = NKr40,000 × $.19
Equity in net income from subsidiary recognized $26,000 = NKr130,000 × $.20
Parents share of translation adjustment recorded.
Amortization of differential recognized.

Determination of differential in amortization Schedule 1

Particulars	Kroner	Exchange rate	U.S. Dollars
Property, plant, and equipment:
Income statement:
Difference at beginning of the year	100,000	.18	18,000
Amortization 20X5 NKr100,000 ÷ 10 years	(10,000)	.20	(2,000)
Balance	90,000		16,000

Balance sheet:
Remaining balance on December 31, 20X5	90,000	.21	18,900
Difference to other comprehensive income – translation adjustment			2,900


Patients:
Income statement:
Difference at the beginning of year	40,000	.18	7,200
Amortization 20X5 NKr40,000 ÷ 5 years	(8,000)	.20	(1,600)
Remaining balance	32,000		5,600

Balance sheet:
Balance on December 31,20X5	32,000	.21	6,720
Differential other comprehensive income – translation adjustment			1,120

Amortization of differential

Property plant and equipment $2,900

Patient $1,120

Total $4,020

c

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule for T’s consolidated comprehensive income for 20X5.

c

Expert Solution

Answer to Problem 12.17P

T’s consolidated comprehensive income $322,920.

Explanation of Solution

Computation of T’s comprehensive income

Particulars	U.S. Dollars
Income from T’s operations for 20X5	275,000
Add: Income from the N subsidiary	26,000
Less: Amortization of differential	(3,600)
T’s net income	297,400
Add: translation adjustment $21,500 + 4,020	25,520
Total consolidated comprehensive income	322,920

d

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

T’s total consolidated stockholders equity at December 31, 20X5.

d

Expert Solution

Answer to Problem 12.17P

T’s total consolidated stockholders equity at December 31, 20X5 $3,722,920.

Explanation of Solution

Computation of T’s stockholders’ equity for December 31, 20X5.

Particulars	U.S. Dollars
T’s stockholders’ equity at January 1, 20X5	3,500,000
Add: Net income for 20X5	297,400
Less: Dividends declared by T during 20X5	(100,000)
Add: Accumulated other comprehensive income – translation adjustment	25,520
Consolidated stockholders’ equity at December 31, 20X5	3,722,920

Answer 6

Chapter 12, Problem 12.17P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule translating the trial balance from N kroner to dollar assuming the krone is the functional currency.

a

Expert Solution

Answer to Problem 12.17P

The trial balance total after transaction adjustment December 31 20X4 $267,420.

Explanation of Solution

V Inc.

Trial balance translation

For the year ended December 31, 20X5

Particulars	Kroner	Exchange rate	U.S. Dollars
Cash	150,000	.21	31,500
Accounts receivable	200,000	.21	42,000
Inventory	270,000	.21	56,700
Property, Plant and equipment	600,000	.21	126,000
Cost of goods sold	410,000	.20	82,000
Operating expenses	100,000	.20	20,000
Depreciation expenses	50,000	.20	10,000
Dividends paid	40,000	.19	7,600
Total debit	1,820,000		375,800

Accumulated depreciation	150,000	.21	31,500
Accounts payable	90,000	.21	18,900
Notes payable	190,000	.21	39,900
Common stock	450,000	.18	81,000
Retained earnings	250,000	.18	45,000
Sales	690,000	.20	138,000
Total	1,820,000		354,300
Accumulated other comprehensive income –translation adjustment credit	24,000	.20	4,800 21,500
Total credit			375,800

Answer 7

Chapter 12, Problem 12.17P

a

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule translating the trial balance from N kroner to dollar assuming the krone is the functional currency.

Answer 8

a

Expert Solution

Answer to Problem 12.17P

The trial balance total after transaction adjustment December 31 20X4 $267,420.

Answer 9

a

Expert Solution

Answer 10

a

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

V Inc.

Trial balance translation

For the year ended December 31, 20X5

Particulars	Kroner	Exchange rate	U.S. Dollars
Cash	150,000	.21	31,500
Accounts receivable	200,000	.21	42,000
Inventory	270,000	.21	56,700
Property, Plant and equipment	600,000	.21	126,000
Cost of goods sold	410,000	.20	82,000
Operating expenses	100,000	.20	20,000
Depreciation expenses	50,000	.20	10,000
Dividends paid	40,000	.19	7,600
Total debit	1,820,000		375,800

Accumulated depreciation	150,000	.21	31,500
Accounts payable	90,000	.21	18,900
Notes payable	190,000	.21	39,900
Common stock	450,000	.18	81,000
Retained earnings	250,000	.18	45,000
Sales	690,000	.20	138,000
Total	1,820,000		354,300
Accumulated other comprehensive income –translation adjustment credit	24,000	.20	4,800 21,500
Total credit			375,800

Answer 13

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The journal entries that relate to its investment in N subsidiary during 20X5 assuming T uses fully adjusted equity method.

b

Expert Solution

Explanation of Solution

Date	Particulars	Amount $	Amount $
Jan 1	Investment in V company Stock	151,200
	Cash		151,200
	(cash paid for purchase of investment from V)

July 1	Cash	7,600
	Investment in V company		7,600
	(Cash received on account of dividends)

Dec 31	Investment in V’s common stock	26,000
	Income from subsidiary		26,000
	(recognition of equity in net income from subsidiary

	Investment in V common stock other income	21,500
	Translation adjustment		21,500
	(Translation adjustment is recognized)

	Income from subsidiary	3,600
	Investment in V company		3,600
	(amortization of differential)

	Investment in V Company common stock other comprehensive income	4,020
	Translation adjustment		4,020

Working Notes:

Purchase of investment from V Inc. recorded.
Cash received on account of dividends from V $7,600 = NKr40,000 × $.19
Equity in net income from subsidiary recognized $26,000 = NKr130,000 × $.20
Parents share of translation adjustment recorded.
Amortization of differential recognized.

Determination of differential in amortization Schedule 1

Particulars	Kroner	Exchange rate	U.S. Dollars
Property, plant, and equipment:
Income statement:
Difference at beginning of the year	100,000	.18	18,000
Amortization 20X5 NKr100,000 ÷ 10 years	(10,000)	.20	(2,000)
Balance	90,000		16,000

Balance sheet:
Remaining balance on December 31, 20X5	90,000	.21	18,900
Difference to other comprehensive income – translation adjustment			2,900


Patients:
Income statement:
Difference at the beginning of year	40,000	.18	7,200
Amortization 20X5 NKr40,000 ÷ 5 years	(8,000)	.20	(1,600)
Remaining balance	32,000		5,600

Balance sheet:
Balance on December 31,20X5	32,000	.21	6,720
Differential other comprehensive income – translation adjustment			1,120

Amortization of differential

Property plant and equipment $2,900

Patient $1,120

Total $4,020

Answer 14

b

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

The journal entries that relate to its investment in N subsidiary during 20X5 assuming T uses fully adjusted equity method.

Answer 15

b

Expert Solution

Explanation of Solution

Date	Particulars	Amount $	Amount $
Jan 1	Investment in V company Stock	151,200
	Cash		151,200
	(cash paid for purchase of investment from V)

July 1	Cash	7,600
	Investment in V company		7,600
	(Cash received on account of dividends)

Dec 31	Investment in V’s common stock	26,000
	Income from subsidiary		26,000
	(recognition of equity in net income from subsidiary

	Investment in V common stock other income	21,500
	Translation adjustment		21,500
	(Translation adjustment is recognized)

	Income from subsidiary	3,600
	Investment in V company		3,600
	(amortization of differential)

	Investment in V Company common stock other comprehensive income	4,020
	Translation adjustment		4,020

Working Notes:

Purchase of investment from V Inc. recorded.
Cash received on account of dividends from V $7,600 = NKr40,000 × $.19
Equity in net income from subsidiary recognized $26,000 = NKr130,000 × $.20
Parents share of translation adjustment recorded.
Amortization of differential recognized.

Determination of differential in amortization Schedule 1

Particulars	Kroner	Exchange rate	U.S. Dollars
Property, plant, and equipment:
Income statement:
Difference at beginning of the year	100,000	.18	18,000
Amortization 20X5 NKr100,000 ÷ 10 years	(10,000)	.20	(2,000)
Balance	90,000		16,000

Balance sheet:
Remaining balance on December 31, 20X5	90,000	.21	18,900
Difference to other comprehensive income – translation adjustment			2,900


Patients:
Income statement:
Difference at the beginning of year	40,000	.18	7,200
Amortization 20X5 NKr40,000 ÷ 5 years	(8,000)	.20	(1,600)
Remaining balance	32,000		5,600

Balance sheet:
Balance on December 31,20X5	32,000	.21	6,720
Differential other comprehensive income – translation adjustment			1,120

Amortization of differential

Property plant and equipment $2,900

Patient $1,120

Total $4,020

Answer 16

b

Expert Solution

Answer 17

b

Expert Solution

Answer 18

Expert Solution

Answer 19

c

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule for T’s consolidated comprehensive income for 20X5.

c

Expert Solution

Answer to Problem 12.17P

T’s consolidated comprehensive income $322,920.

Explanation of Solution

Computation of T’s comprehensive income

Particulars	U.S. Dollars
Income from T’s operations for 20X5	275,000
Add: Income from the N subsidiary	26,000
Less: Amortization of differential	(3,600)
T’s net income	297,400
Add: translation adjustment $21,500 + 4,020	25,520
Total consolidated comprehensive income	322,920

Answer 20

c

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

Preparation of a schedule for T’s consolidated comprehensive income for 20X5.

Answer 21

c

Expert Solution

Answer to Problem 12.17P

T’s consolidated comprehensive income $322,920.

Answer 22

c

Expert Solution

Answer 23

c

Expert Solution

Answer 24

Expert Solution

Answer 25

Explanation of Solution

Computation of T’s comprehensive income

Particulars	U.S. Dollars
Income from T’s operations for 20X5	275,000
Add: Income from the N subsidiary	26,000
Less: Amortization of differential	(3,600)
T’s net income	297,400
Add: translation adjustment $21,500 + 4,020	25,520
Total consolidated comprehensive income	322,920

Answer 26

d

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

T’s total consolidated stockholders equity at December 31, 20X5.

d

Expert Solution

Answer to Problem 12.17P

T’s total consolidated stockholders equity at December 31, 20X5 $3,722,920.

Explanation of Solution

Computation of T’s stockholders’ equity for December 31, 20X5.

Particulars	U.S. Dollars
T’s stockholders’ equity at January 1, 20X5	3,500,000
Add: Net income for 20X5	297,400
Less: Dividends declared by T during 20X5	(100,000)
Add: Accumulated other comprehensive income – translation adjustment	25,520
Consolidated stockholders’ equity at December 31, 20X5	3,722,920

Answer 27

d

To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency. Because revenues and expenses are assumed to occur uniformly over the period, revenues and expenses on the income statement are translated using the average rate for the reporting period. Any translation adjustment that occurs is a component of comprehensive income. The method used to translate financial statement from the local currency to functional currency is called current rate method.

T’s total consolidated stockholders equity at December 31, 20X5.

Answer 28

d

Expert Solution

Answer to Problem 12.17P

T’s total consolidated stockholders equity at December 31, 20X5 $3,722,920.

Answer 29

d

Expert Solution

Answer 30

d

Expert Solution

Answer 31

Expert Solution

Answer 32

Explanation of Solution

Computation of T’s stockholders’ equity for December 31, 20X5.

Particulars	U.S. Dollars
T’s stockholders’ equity at January 1, 20X5	3,500,000
Add: Net income for 20X5	297,400
Less: Dividends declared by T during 20X5	(100,000)
Add: Accumulated other comprehensive income – translation adjustment	25,520
Consolidated stockholders’ equity at December 31, 20X5	3,722,920